Bicycling is booming, says top economist

Carlton Reid
Bicycling is booming, says top economist

A 24-page report on the state of the 'cycling economy' and the prospects for the future has been released via the London School of Economics. The report - 'The British Cycling Economy' - was written by Dr Alexander Grous, a productivity and innovation specialist in the Centre of Economic Performance at LSE. He has an interest in sports and sponsorship economics including how corporate participation in sports can foster social, economic and health benefits. His report was commissioned by Sky and British Cycling.

Dr Grous said: "Cycling in the UK has undergone a renaissance over the past five years, with an increasing number of people taking to the streets of the UK by bike. Structural, economic, social and health factors have caused a ‘shift in the sand’ in the UK, spurring an expansion in the cycling market with indications that this will be a longer-term trend. This growth in cycling participation has had the knock-on effect of bringing economic and social benefits to the UK. In 2010 the result was a gross cycling contribution to the UK economy of £2.9bn."

Dr Grous set out to quantify the economic benefits generated by individual cyclists, taking into account factors including bicycle retail, and employment. He concluded that the 'gross cycling product' was £230 per cyclist, per annum.

"If this trend of growth in cycling participation continues, one million additional 'Regular Cyclists' could contribute £141m to the UK economy by 2013 whilst concurrently reducing absenteeism and improving the individual’s health, providing an incremental economic benefit," said Dr Grous.

Some of the one million cyclists now nudged into the 'Regular Cyclist' category were encouraged to do so by events such as the Sky-sponsored Skyride city bike rides, said the LSE academic, who is a keen triathlete and cyclist. 

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The 'British Cycling Economy' paints a rosy picture of bicycle retail, claiming increased sales of 28 percent year on year in 2010 with sales of 3.7m bikes generating £1.62bn.

"The UK retail bicycle sector displays a high degree of polarisation with a small number of larger independent and corporate chains controlling a large proportion of the market. Around 2,000 stores operate across a spectrum of activities including sales, servicing, workshops, and other speciality areas," said Dr Grous. 

"Evans Cycles remains the UK’s largest independent cycle specialist with 43 dedicated cycling stores nationally, whilst Halfords controls over a third of the market in terms of sales, with over 1m bikes sold annually through 400 stores."

The LSE academic believes the annual sales of cycle accessories is £853m. Over £500m generated in wages and £100m in taxes from 23,000 people employed directly in bicycle sales, distribution and the maintenance of cycling infrastructure.
He said the health benefits of cycling save the economy £128m per year in less absenteeism.


If the Government encouraged cycling more, there could be a saving of a further £2bn over a ten-year period in terms of reduced absenteeism. A 20 per cent increase in current cycling levels by 2015 could save the economy £207m in terms of reduced traffic congestion and £71m in terms of lower pollution levels. Latent demand for cycling could amount to around £516m of untapped economic potential for the UK.

Praising the work of industry seed-funded schemes such as Bike It (a schools project managed by Sustrans and originally funded by the Bike Hub levy), Dr Grous said "enabling children to ride to school by bicycle…reduced the number that had never cycled to school from 73 per cent to 56 per cent. These benefits have occurred against a backdrop of increasing road congestion, rising CO2 emissions and physical inactivity, which are estimated to collectively cost the UK £56bn a year."

The bicycle industry's Bike Hub levy pays for schemes to encourage the 'hesitant cyclist' - such as getting newcomers to start cycling to work via an online journey planner and smartphone app that routes on bike paths - and Dr Grous said "unlocking the hesitant cyclist could be the catalyst to wider participation rates."

He said: "Safety, road confidence, self-belief and time available for cycling are all cited as barriers."

But we warns that the Government does too little for cycling provision:

"The proportion of GDP spent on public cycling infrastructure by the UK Government has been lower than government spending in many other countries."

Yet, by encouraging cycling, the Government could accrue many benefits.

"The economic value of new recreational cyclists can be calculated as £320 per capita. New cycle commuters, on the other hand, are estimated to contribute £505 per head in terms of typical bicycle and accessory purchases. Encouraging all 2,215,700 latent consumers to become recreational cyclists could therefore be worth over £709m to the UK economy," said Dr Grous. 

"Whilst it is unlikely that all this latent potential can be unlocked in the short term, the scale of the opportunity is clear.  In a challenging economic period, the outlook for the UK cycling industry is positive, with indications that the sector is making a significant and growing contribution to Britain’s economy, generating an estimated £2.9b per annum with strong signs of sustainable growth over the long term."

Tags: british cycling , sky , statistics , lse

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